Two million people have not worked in six months and millions more expect to lose jobs by May

ALMOST two million people have not worked for at least six months of the pandemic, and a further 2.6 million expect to lose their jobs within three months.

A new study by the Resolution Foundation think tank into the state of the UK labour market as a result of the crisis has uncovered the staggering extent of unemployment and furlough across the country.

It also warns that unemployment rates are predicted to grow when government support schemes, such as the Coronavirus Job Retention Scheme (CJRS), come to an end.

The report, titled ‘Long Covid in the labour market’, found that by January 2021, around 700,000 workers had been unemployed for at least six months, and a further 500,000 had been fully furloughed for the same amount of time.

But as some people have moved between unemployment and full furlough in recent months, the total number who had been in a combination of both for at least six months was 1.9 million.

While the number of workers on the Job Retention Scheme in this lockdown is at 4.5 million, half of the 9 million peak during the first lockdown, the foundation said “the cumulative impact of a crisis that has lasted almost a year is causing the biggest challenges in the labour market”. 

The Foundation has argued ahead of the Budget next month the Chancellor should set out a plan to phase out the CJRS “that is sensitive to public health restrictions and the sectoral nature of the crisis.”

Their report suggests the full CJRS should be kept on for “several months” after the public health restrictions are lifted to give companies time to bring staff back and it should remain for the sectors still subject to restrictions, such as hospitality and leisure.

When it is phased out, it should be done so gradually be increasing the number of hours people have to work in order to qualify for support.

Researchers surveyed 6,389 18 to 65-year-olds between January 22 and 26 this year across the whole of the UK before analysing their findings.

Along with the length of time people had been furloughed, the study also found that those who had been furloughed for six months or more were much more likely to fear being made redundant, or have already been told they will be, in the next three months.

The report calls for the full scheme to remain in place for several months after Covid restrictions have been lifted, and even longer in sectors still subject to legal restrictions like hospitality and leisure. 

It also wants Sunak to extend the Kickstart Scheme, introduce a wage subsidy scheme for hard-hit sectors, or raise the National Insurance threshold on new starters.

Nye Cominetti, senior economist at the Resolution Foundation, said: “Ten months into the crisis, almost two million people have now been affected by long Covid in the labour market, having not worked for at least six months.

“And while the UK’s economic prospects are finally looking up, job insecurity remains high, particularly among those who have spent long periods not working, or who are currently furloughed.

“The Chancellor must use his Budget to set out his own roadmap for phasing out the furlough scheme gradually and in a way that acknowledges where the risks of rising unemployment are highest – in sectors like hospitality.

“This would keep a lid on rising unemployment and encourage firms to bring back existing workers, while tax breaks on hiring could help more people to move jobs too.”

More BAME workers (11%) said they were worried about being made redundant, or had been told they would be compared to their white peers (8%) while young people (12%) and low paid workers (16%) reported being in the same situation – more so than those older or in higher paid jobs.

The study, which was done in conjunction with the Health Foundation, comes ahead of the Budget on March 3.

The Foundation has warned that impact of the crisis on the jobs market will “continue to build” when schemes such as the Coronavirus Job Retention Scheme (CJRS) comes to an end.

Their report states: “With the pandemic having now lasted for nearly a year, the impact on the labour market has continued to build.

A Treasury spokesperson said: “Throughout this crisis, we have done all we can to support jobs and livelihoods, spending over £280 billion in response to the pandemic.

“We’ve already extended our furlough scheme through to April so that people have certainty that help is in place.

“We will continue to invest in protecting and creating jobs through the remainder of the pandemic and through the recovery, and we will set out further details via the next stage of our Plan for Jobs at the upcoming Budget.”